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Ganguly, Arup (2018) TEXTUAL DISCLOSURE IN SEC FILINGS AND LITIGATION RISK. Doctoral Dissertation, University of Pittsburgh. (Unpublished)

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Prior studies are quite ambivalent on the relation between disclosure and litigation risk since greater disclosure can be perceived as either ex-ante deterrent or ex-post misleading. I hypothesize that more information is disclosed in the non-numerical narratives in SEC filings than that has been analyzed in the extant literature. Using comprehensive hand-collected data on federal securities class action lawsuits spanning nearly two decades, matched peers, and widely used measures in natural language processing (NLP) that capture degree, readability, and sentiments in textual disclosures, I find results consistent with the theoretical view that argues that more and difficult to comprehend disclosure is often perceived as ex-post misleading, hence, increasing the odds of litigations. After controlling for other explanatory numerical variables, these results are robust to various empirical specifications using difference-in-differences (DiD), principal component analyses (PCA), and market response, across different types of shareholder class action litigations. Finally, using the Ninth Circuit Court of Appeals ruling, Re: Silicon Graphics Inc., that led to an unexpected and sudden reduction in the threat of litigation for firms headquartered in the Ninth Circuit, I find that firms that are headquartered in the Ninth Circuit tend to use more uncertainty words in their filings post-shock, which is consistent with my main results. Such findings indicate that there is a need to distinguish between more versus better disclosures.


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Item Type: University of Pittsburgh ETD
Status: Unpublished
CreatorsEmailPitt UsernameORCID
Ganguly, ArupArup.Ganguly@pitt.eduarg89
ETD Committee:
TitleMemberEmail AddressPitt UsernameORCID
Committee ChairLehn,
Committee MemberDenis,
Committee MemberMoeller,
Committee MemberZutter,
Committee MemberBranson,
Date: 27 September 2018
Date Type: Publication
Defense Date: 10 August 2018
Approval Date: 27 September 2018
Submission Date: 15 August 2018
Access Restriction: No restriction; Release the ETD for access worldwide immediately.
Number of Pages: 114
Institution: University of Pittsburgh
Schools and Programs: Joseph M. Katz Graduate School of Business > Business Administration
Degree: PhD - Doctor of Philosophy
Thesis Type: Doctoral Dissertation
Refereed: Yes
Uncontrolled Keywords: Securities litigation risk, Disclosure, Textual analysis, Endogeneity
Date Deposited: 27 Sep 2018 16:52
Last Modified: 27 Sep 2018 16:52


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